Correlation Between Seaboard and ALERION CLEANPOWER

Can any of the company-specific risk be diversified away by investing in both Seaboard and ALERION CLEANPOWER at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Seaboard and ALERION CLEANPOWER into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Seaboard and ALERION CLEANPOWER, you can compare the effects of market volatilities on Seaboard and ALERION CLEANPOWER and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Seaboard with a short position of ALERION CLEANPOWER. Check out your portfolio center. Please also check ongoing floating volatility patterns of Seaboard and ALERION CLEANPOWER.

Diversification Opportunities for Seaboard and ALERION CLEANPOWER

-0.38

Correlation Coefficient

Seaboard  ALERION CLEANPOWER

Very good diversification

The 3 months correlation between Seaboard and ALERION is -0.38. Overlapping area represents the amount of risk that can be diversified away by holding Seaboard and ALERION CLEANPOWER in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on ALERION CLEANPOWER and Seaboard is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Seaboard are associated (or correlated) with ALERION CLEANPOWER. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of ALERION CLEANPOWER has no effect on the direction of Seaboard i.e., Seaboard and ALERION CLEANPOWER go up and down completely randomly.

Pair Corralation between Seaboard and ALERION CLEANPOWER

Assuming the 90 days horizon Seaboard is expected to under-perform the ALERION CLEANPOWER. But the stock apears to be less risky and, when comparing its historical volatility, Seaboard is 1.94 times less risky than ALERION CLEANPOWER. The stock trades about -0.21 of its potential returns per unit of risk. The ALERION CLEANPOWER is currently generating about 0.02 of returns per unit of risk over similar time horizon. If you would invest  1,598  in ALERION CLEANPOWER on September 21, 2024 and sell it today you would earn a total of  26.00  from holding ALERION CLEANPOWER or generate 1.63% return on investment over 90 days.

Time Period	3 Months [change]
Direction	Moves Against
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Seaboard  vs.  ALERION CLEANPOWER

Seaboard

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days Seaboard has generated negative risk-adjusted returns adding no value to investors with long positions. Despite fragile performance in the last few months, the Stock's basic indicators remain nearly stable which may send shares a bit higher in January 2025. The current disturbance may also be a sign of long-run up-swing for the company stockholders.

ALERION CLEANPOWER

Risk-Adjusted Performance

1 of 100

Weak

Compared to the overall equity markets, risk-adjusted returns on investments in ALERION CLEANPOWER are ranked lower than 1 (%) of all global equities and portfolios over the last 90 days. Despite nearly stable basic indicators, ALERION CLEANPOWER is not utilizing all of its potentials. The current stock price disturbance, may contribute to mid-run losses for the stockholders.

Pair Trading with Seaboard and ALERION CLEANPOWER

The main advantage of trading using opposite Seaboard and ALERION CLEANPOWER positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Seaboard position performs unexpectedly, ALERION CLEANPOWER can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in ALERION CLEANPOWER will offset losses from the drop in ALERION CLEANPOWER's long position.

The idea behind Seaboard and ALERION CLEANPOWER pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Portfolio Diagnostics module to use generated alerts and portfolio events aggregator to diagnose current holdings.